Some odd things are said and claimed in our comment streams.
But mainly, most discussion threads are useful and add a lot to interest.co.nz.
One useful thing is that some comments cause you to think whether the claim is true or not.
There was one today that had that effect on me:
by sharetrader | Thu, 09/03/2017 – 08:13
yet wages are not rising at the same rate, so those renting will have to forgo consumer spending to afford the roof.
also if a lot of the roofs supplied are with borrowed funds, a lot more will flow offshore.
then what, will the state have to step in with more funding? from where? more taxes? less services?
this is like the train heading towards the bridge that is out, we can see what is going to happen and we are waiting for the people in charge to arrange a fix but they are having a long smoko break instead
Because I can, I decided to check the validity of the general assertion that “wages are not rising at the same rate”. In an election year, such claims become freely tossed about in order to promote one political side, or undermine another.
But this one is checkable at a pretty basic level.
We track “take-home pay” as part of our home loan affordability series. And we do that for specific age-groups. First home buyer households are a particular focus of ours, and that involves people in the 25-29 age range.
And this review starts on January 1, 2007, chosen because it is just before the GFC. We could start anywhere, but that is as good a place as any and involves a neat decade’s view.
Firstly, here is take-home pay for a 25-29 year old household, national median numbers. This is a median wage for one male and one female, without children.
To more clearly compare changes from disparate data series, we have indexed the data to a 1-Jan-2007 base.
By showing this series by itself, you can clearly see the effect the two tax cuts had on household income in the past decade, and see the quite modest, but steady, rise in after-tax pay.
Now, lets look at how house prices have changed over the same period. For a 25-29 year old household, they will be a first-home buyer and purchasing in the lower quartile category. Again, these are national medians.
So, house prices have risen marginally faster than household incomes over this period.
But interest rates have changed a lot over this period, falling to record low levels. That has substantially changed the level of mortgage payments to significantly lower levels.
Over the past year, it is clear that mortgage payments have been rising faster than take-home pay. But that has not been the case over the longer run.
But these households also have the option to rent. Assumed here is they are renting a median 3 bedroom house.
And the story is different for rents. But probably not by as much as you might think.
For the past two years rents have been rising faster than incomes, a change from what happened for the previous eight.
So that makes Sharetrader’s comment claim ‘correct’ – but only just.
Of course, these are all national comparatives. For readers living in Auckland, the story will be different, and worse, in almost all cases.
But for readers living in most other centres, it is likely to be ‘better’ than the national data.
And finally, in this set, here is the CPI compared over the same period.
You can see the impact of the one GST rise in this comparative. But all the same, it is clear that first-home buyer households have made modest gains in real incomes over the past decade.
Feel free to draw your own conclusions from these data series. Mine is that there is there is a lot less to the affordability stress than is being written about (except in Auckland of course).
And our monthly home loan affordability reports pretty much show the same thing; most places are affordable in New Zealand for first home buyers, except Auckland and Queenstown. Auckland’s issues will dominate the election campaigning, and discussion volumes will probably dominate the national media coverage.
Feel free to request additional comparatives in the comment section below. I won’t guarantee I will add them, but depending on time available I may add some.